The agency, which was predicting a glut to persist till the end of decade, suggested that oil price may have bottomed in today's released report. Oil price has gained close to 50% from their made in early February, however it still down more than 60% from its peak in summer of 2014.

International Energy Agency, reputed watchdog of energy markets cited recent cooperation among large global producers and slower than expected return of Iran in the oil market has contributed to this rise in price along with production decline in non-OPEC countries and weaker Dollar. However any potential agreement between OPEC and non-OPEC unlikely to impact physical market in the first half of 2016 but recent outages in Iraq, Nigeria and UAE have taken 350,000 barrels/day out of the market.

Latest data shows Iran production increased by 220,000 barrels/day in February, compared to 500,000 barrels/day. IEA now believes Iran's return to the market would be gradual. The agency now expect bigger drop in high cost production in tune of 750,000 barrels/day compared to previous forecast of 600,000 barrels/day. In February, global production dropped by 180,000 barrels/day, while OPEC production eased by 90,000 barrels/day to 32.6 million barrels/day. It expects US production to drop by 530,000 barrels/day this year.

However, IEA has warned that further rise in prices may not bode well for demand.

WTI is currently trading $38.6/barrel and Brent at $2.1/barrel premium.